Indian businessman Prateek Gupta appeared in court, alleging that a former top nickel trader at Trafigura was involved in a scheme to ship large quantities of fake nickel.
During his testimony via video link from Dubai on Wednesday, Mr. Gupta stated that in 2019, Socrates Economou proposed a plan that included transporting what was purported to be nickel but was actually filled with lower-value materials like briquettes.
This marked Mr. Gupta’s first day on the stand as a defendant in a $600 million lawsuit initiated by Trafigura, claiming that he and his companies are responsible for a sophisticated fraud. The trial, taking place at London’s High Court, began earlier in the month and is expected to last five weeks.
Mr. Gupta’s legal team argues that the trading company played a part in the scheme, profiting from it by earning interest on financing the cargo during transportation.
Economou, who previously led nickel trading at Trafigura, denied having any knowledge of the alleged fraud. He expressed outrage at the suggestion that he would compromise his integrity or jeopardize his career to create such a plan.
When pressed by Trafigura’s attorney, Nathan Pillow KC, about whether he believed the proposed deal was fraudulent, Mr. Gupta replied, “That’s what they suggested…I just followed the instructions.”
In response to a question from 2019 about whether he considered the offer to be a “fraudulent or deceptive arrangement,” Mr. Gupta replied “no.”
He maintained that he wasn’t familiar with how the proposed plan would operate, insisting that Economou and another ex-Trafigura employee, Harshdeep Bhatia, would consult with their colleagues on structuring the agreement. He mentioned that Mr. Bhatia later informed him that the plan had received approval, stating, “At that stage he said: [Bhatia] I was reporting to the CEO,” who was then Jeremy Weir.
Nonetheless, Mr. Gupta claimed that two former Trafigura employees instructed him to keep quiet about the arrangement and only discuss it with select individuals.
When questioned by Mr. Pillow on whether he suspected Trafigura was attempting to mislead the public, Mr. Gupta acknowledged, “Potentially yes,” regarding the possible misrepresentation of the cargo as pure nickel.
Mr. Pillow pointed out that this seemed to imply an acknowledgment of “fraud,” to which Mr. Gupta replied, “Not by me.”
In the ongoing lawsuit, Trafigura stated that it made a mere $10 million profit selling the contents of the cargo purchased from Gupta for $500 million.
On Monday, the court learned that concerns about the commercial arrangement had been noted by Trafigura’s trade finance team before the fraud was uncovered.
Issues cited included unusually lengthy transit times for the supposed nickel shipments and the relatively high interest rates charged to Mr. Gupta’s company for financing the cargo. One trade finance desk member, Thibault Barthelme, expressed worry in a 2020 email, stating, “My main concern is that we have become this company’s bank,” in light of the substantial funding Trafigura provided to Mr. Gupta’s business.
The trial is ongoing.
